Eminent Domain Abuse & Hoboken, New Jersey

April 14, 2006 Hoboken, New Jersey was once the busy port city of Elia Kazan's 1954 film, "On The Waterfront". But by the 1970's, Hoboken had ceased to be a contender. Laid low by post industrial malaise, many of its docks and factories were half empty or abandoned. Then, at the end of the decade, Hoboken hit real estate pay dirt. As the price of housing climbed in Manhattan across the Hudson, Hoboken picked up a massive outflow of young, middle class professionals. Apartment and condo towers sprang up like mushrooms along the waterfront, and development became the city's primary economic engine. Since Hoboken was considered an urban orphan, much of its redevelopment was accomplished with financial assistance from federal, state and local government, through various forms of direct funding, tax breaks, and advantageous loans. Some arrangements carried the stipulation developers provide a degree of affordable housing for those displaced by the Manhattan exodus.

Circa 2006, mile square Hoboken is fast becoming a mini mirror of Manhattan. A place where only the wealthy, or the subsidized (albeit in lesser numbers) can afford housing. The initial middle class emigres were followed by waves of the more affluent, and the revitalization that began on the waterfront has reached the far corners of the city. Hoboken is now one of the most expensive swaths of real estate in New Jersey. Yet taxpayers are still being tapped for development assistance, and a sizable section of the northwest part of the city is an officially designated "redevelopment area". Hence, open to the use of eminent domain.

Eminent domain is the constitutional right of government to take private property in the name of "public use". Fair recompense is supposedly paid. But eminent domain is a forced sale, with all the bargaining power on government's side. Which is one reason why eminent domain has traditionally been used sparingly, for clear-cut public use projects such as roads and schools.

Over the last few decades, the interpretation of "public use" has broadened to cover development projects which promise to produce more municipal tax revenues, enhancement of property values in nearby neighborhoods, and/or provide jobs. In such instances, property is taken from those whose use is deemed insufficient, and given to developers offering greater rewards. This type of eminent domain is often called eminent domain abuse (EDA). Despite last year's Supreme Court decision (Kelo v. New London) that let EDA stand, development related eminent domain has raised the ire of people across the nation. One of many objections being that EDA and political corruption make a perfect couple.

New Jersey's political corruption is legendary. And the legend continues to grow. Of late, the state's largest medical college, the University of Medicine and Dentistry of New Jersey (UMDNJ) has been rocked by federal charges of extensive Medicaid fraud, and revelations of crony hiring practices dictated by Jersey's powerful political bosses. Hudson County, where Hoboken is among the municipalities, has a sullied rep even by Garden State standards. The last 5 years have been scandal packed. Investigations, indictments and convictions have touched all levels of local government; from state representatives and county officials, through mayors and city council members, down to low level bureaucrats. Bagmen posing as political consultants have done star turns, as have public contractors and developers.

Players from Hoboken's public theater include former Mayor Anthony Russo, and Joseph Barry, former president of Applied Development Companies. One of Hoboken's-- and the state's-- most prominent developers. Applied is currently waging a particularly ugly eminent domain attack in Long Branch, New Jersey. Both Russo and Barry were convicted, in separate cases, of charges involving "pay-to-play" in Hoboken. (Pay-to-play is the giving or receiving of gifts or contributions in exchange for public contracts, grants, tax abatements, etc.) When Hoboken's current mayor, David Roberts, first ran for election in 2001, he did so as a reformer. Promising to rein in the power of developers and address development related problems. Such as diminishing public space and an over burdened infrastructure. When Mayor Roberts ran for re-election in 2005, developers numbered mightily among his contributors. As did some of Jersey's powerful political bosses. Contributions to Roberts were made either directly, or through local political organizations and committees.

Among the most generous contributors was Applied Development, via another member of the Barry family. The largest amount in toto, came from assorted execs at URSA Development, Tarragon Realty Investors, and Tarragon Capital Corporation. Who, as the combo platter of URSA/Tarragon, have major projects within Hoboken's Northwest Redevelopment Area. The area (sometimes called a "redevelopment zone") was declared open for the use of eminent domain by the Hoboken City Council in 1998-- under the aegis of X Mayor Anthony Russo.

In 1998, local real estate maven Frank "Pupie" Raia, was the designated redeveloper for the northwest area. In early 2001, the quasi-public New Jersey Redevelopment Authority (NJRA), announced that the Northwest Redevelopment Area would receive a 4.75 million loan for a project within the zone. Presumably as part of the NJRA mission to revitalize "New Jersey's most distressed urban neighborhoods". In their press release, NJRA identified Pupie (OK-- NJRA called him "Frank Raia") as the "redeveloper for the 9 block (northwest) area". But Pupie seemed to poop out as sole developer, and eventually entered into a relationship with URSA/Tarragon. A 2003 Tarragon Realty Investors press release announcing a then upcoming, since completed, condo and "affordable" housing project in the Northwest Area, identifies Tarragon, URSA Development, and Pupie as partners. Yet in recent newspaper coverage of a legal dispute over the price of an eminent domain buy-out in the redevelopment zone, Pupie is described, in this particular instance, as having sold his development interests to Ursa/Tarragon. Apparently the power of eminent domain went along with the sale.

Pupie incidentally, was a mayoral hopeful in 2005. Alas, his hopes were dashed in the primary. Any suspicion that Mayor Pupie might have had a potential conflict of interest as a public official when dealing with Ursa/Tarragon, is no doubt groundless. As are suspicions re those Ursa/Tarragon mega contributions to acting Mayor Dave Roberts, and any influence Roberts might have on his supporters in the City Council.

Public Use v. Bigger Purse

Though it may seem odd that in 1998, any part of Hoboken could still be counted among New Jersey's "most distressed urban neighborhoods", it's even stranger that in 2006, the Northwest Redevelopment Area is considered appropriate fodder for eminent domain. But it's important to remember not all people share the same idea of "public use". Within the Northwest Redevelopment Area is a block (the west side of Grand Street, between 10th & 11th Street) housing two thriving small businesses. One is a manufacturer of home decor products. The company provides several dozen people with blue collar jobs. In Hoboken, such jobs have become scarcer than hen's teeth. The other business is a storage facility. For which residents in the adjoining, residential neighborhood say hallelujah. Urban closet space being what it is. Or isn't. Both businesses exist in harmonious relationship with the adjoining residential neighborhood. Those living nearby like the atmosphere of mixed use. Homeowners in the neighborhood enjoy solid property values. Appreciated by all are the low rise brownstone buildings and peaceful atmosphere. Particularly since some other parts of Hoboken are hard hit by the city's bar scene-- and overshadowed by towering conditoriums.

URSA/Tarragon's next project in the Northwest Redevelopment Area? A towering conditorium on the block housing the small manufacturer and storage facility. URSA/Tarragon wants to force the two businesses out with the power of eminent domain. A "public use" rationale being cited is that the project will help glue together Hoboken's sizable budget gap. Which somehow, after decades of revitalizing development, just keeps on a-gaping.

The Hoboken City Council has been dithering about enacting-- or decisively opposing-- the use of eminent domain on this most recent Northwest Development Area project. URSA/Tarragon has filed suit in hopes of making the city enforce its original agreement. The one made when Pupie was designated driver. Public opposition to the use of eminent domain on Grand Street is strong. Some Hobokenites-- and URSA/Tarragon itself-- claim the City Council waffled in hopes the excuse of litigation, or a court decision, would take the EDA hot potato out of their hands. Putting City Council members in the home free zone. Able to say the devil made us do it. Or not do it.

If this sounds convoluted and a tad grassy knoll, we're talking Hudson County and Hoboken here. Where pols and players delight in zany Byzantine antics and often bite off each others' noses to spite the public's face. We're also talking the kind of pretzel positions elected officials all over the nation are assuming, in order to dodge voter wrath over eminent domain abuse, while not stopping the flow of revitalization dollars and political contributions from developers.

One last word about Hoboken. Over the last few years, pay-to- play in the Mile Square City has come under increasingly effective grass roots assault. Which lends support to the theory that injustice eventually produces its opposite. When it comes to the broader, national injustice of EDA, the question is-- how long Lord, how long?